Setting Standard Values for SAP Production Operations

**KP26 – Definition and Explanation (SAP PP / CO)** ### **Definition** **KP26** is the SAP transaction used to **maintain Activity Type Prices** at the **Cost Center** level for a specific fiscal year and version. It defines how much cost is charged per activity unit (such as machine hour, labor hour, setup hour) when these activities are consumed in Production Orders, Process Orders, or Costing. ## **Aim of KP26** The primary aim of KP26 is to **assign a planned or actual price** to each activity type used in manufacturing so that SAP can correctly **calculate production cost**, **confirm order activities**, and **settle costs** accurately. ## **Objectives of KP26** 1. To maintain **planned activity prices** for all activity types such as Machine Hours (MACH), Labor Hours (LABR), Setup Hours (SETUP). 2. To link the activity cost with **work center capacity** and **cost center** for cost calculation. 3. To ensure **accurate cost roll-up** in product costing (CO-PC). 4. To support **precise cost settlement** of production orders (CO-OM). 5. To enable **standard cost estimate** calculation for finished and semifinished goods. ## **Why KP26 is Used in Work Centers (SAP PP)** Work Centers in SAP PP contain **activity types** under the “Costing” tab. When a production order uses a work center, it consumes these activities during: * Machine run time * Setup time * Labor processing time To calculate cost for these activities, SAP needs **activity prices**. These prices come from **KP26**, where each activity type is assigned a value (e.g., PKR 500 per machine hour). Without KP26, the system cannot calculate: * Operation cost * Planned costs during order creation * Actual costs during confirmation * Standard material cost estimate Therefore, KP26 is essential for connecting **PP (work center activities)** with **CO (cost center accounting)**. **Simple Example** You have a work center **WC-MACH01** assigned to Cost Center **CC1000**. Within the work center, activity types are: * MACH (Machine Hour) * LABR (Labor Hour) Machine runtime for an operation = 2 hours Labor activity for an operation = 1 hour You maintain prices in KP26: * MACH = PKR 800 per hour * LABR = PKR 500 per hour During production order costing: Machine cost = 2 × 800 = PKR 1600 Labor cost = 1 × 500 = PKR 500 Total operation cost = PKR 2100 This is how KP26 drives the cost calculation. ## **Conclusion** KP26 is a critical integration point between **SAP PP** and **SAP CO**, enabling accurate costing of production operations by assigning prices to activity types. Without KP26, production orders cannot calculate or settle actual and planned activity costs. Its correct maintenance ensures precise product costing, profitability analysis, and financial accuracy. #SAPPP #SAPCO #KP26 #ActivityTypes #CostCenterAccounting #WorkCenter #SAPProductionPlanning #ProductCosting #SAPTraining #SAPConsulting #SAP #SSPcommunity

1. Master Data Configuration Material Master: Define materials with attributes like material type, plant-specific details, and planning data. Bill of Materials (BOM): Configure BOMs to define the components needed for production. Work Centers: Set up work centers to represent locations where production activities occur. Routings: Define routings to specify the sequence of operations needed to produce a material. Production Resources/Tools (PRT): Manage tools and resources that are used during production. 2. Planning Configuration MRP (Material Requirements Planning): Set up MRP parameters, including planning strategies, lot sizing, and MRP types. Demand Management: Configure how demand is handled, including forecast and independent requirements. Production Planning Strategies: Define strategies like make-to-stock, make-to-order, and others. 3. Production Order Management Order Types: Configure different order types for production orders, including standard and special orders. Order Processing: Set up parameters for order release, scheduling, and confirmation. Work Order Execution: Define processes for work order execution and monitoring. 4. Capacity Planning Capacity Planning: Configure capacity planning tools to manage and balance production capacity across work centers. Planning Tables: Set up tables to monitor and plan capacity requirements. 5. Configuration of Production Versions Production Versions: Define versions for products, including the BOM and routing to use for production. 6. Integration Points Integration with SD (Sales and Distribution): Ensure smooth flow of sales orders to production planning. Integration with MM (Materials Management): Link procurement processes with production planning. Integration with QM (Quality Management): Incorporate quality checks into the production process. 7. Reporting and Analytics Configure Reporting Tools: Set up reports and analytics to monitor production performance and KPIs. 8. User Authorizations Authorization Objects: Define roles and permissions for users based on their responsibilities in the production process. Configuration Steps in SAP PP 1. Define Plant Parameters: Start by setting up plant-specific parameters and details. 2. Configure MRP Settings: Set up the MRP types, planning strategies, and lot-sizing procedures. 3. Set Up Work Centers and Routings: Define work centers and create routings for production processes. 4. Create and Assign BOMs: Set up BOMs for materials and link them to the production process. 5. Configure Production Order Types: Define and customize different types of production orders. 6. Establish Capacity Planning Parameters: Configure how capacity planning will be handled and monitored. 7. Integrate with Other Modules: Ensure that SAP PP is properly integrated with SD, MM, and QM modules.

SAP Guide: BOM, Work Center & Routing Config for FMCG ! 1. BOM Configuration (Think: Product Recipe) Your BOM (Bill of Materials) is like the ingredients + packaging list for a product like shampoo or face cream. Key Config Elements: BOM Usage - Defines purpose (e.g., Production, Costing) Tcode: OS20 BOM Status - Active / Blocked / Under Change Tcode: OS23 Allowed Material Types - ROH (Raw), VERP (Packaging), HALB (Semi-finished) Tcode: OS22 Item Categories - Stock (L), Non-stock (N), Document (D) Tcode: OS25 User Settings - Customize BOM views Tcode: CS01, CS03 Example BOM for Herbal Shampoo 500ml: Water (ROH) Bottle (VERP) Label (VERP) Fragrance (ROH) 2. Work Center Configuration (Where Work Happens) Think of work centers as the machines or manual stations where production steps happen. Key Config Elements: Category - Machine, Labor, External Tcode: OP40 Field Selection - Control field visibility Tcode: OPFA Usage - For Routing or Costing Tcode: OP00 Person Responsible / Location Tcode: CR02 Standard Value Key & Parameters Tcode: OP17, OP19 Control Key - Manages costing, scheduling, confirmations Tcode: OP00Machine Rate: ₹5/min Cost = 60 x 5 = ₹300 3. Routing Configuration (The "How-To" of Production) Routing defines the sequence of steps in manufacturing a product. Key Config Elements: Allowed Material Types - HALB, FERT Tcode: OP18 Task List Usage - For Production or Planning Tcode: OP03 Routing Status - Released, Blocked Tcode: OP05 Control Key + Field Selection Tcode: OP00, OPFA User Fields / Default Profiles Tcode: OPUG, OPKO Routing Number Range Tcode: OPNR Example Routing for Face Cream (FERT): 1. Mix Ingredients - Work Center: MCH01 - 60 mins2. Fill Tubes - Work Center: MCH02 - 30 min 3. Label & Seal - Work Center: EXT01 - 20 mins Tip: Use default profiles to reduce errors and speed up Routing/BOM creation. Follow for more NagaSindhuja Methuku #SAP #SAPPP #SAPConsultant #FMCG #ProductionPlanning #BOM #Routing #WorkCenter #SAPConfiguration #ERP #SAPFormulas #DIYGuide #SAPBeginners #MadeWithSAP #LinkedInLearning